10-QPeriod: Q1 FY2020

ENTEGRIS INC Quarterly Report for Q1 Ended Mar 28, 2020

Filed April 21, 2020For Securities:ENTG

Summary

Entegris Inc. (ENTG) reported a solid first quarter of 2020, with net sales increasing by 5% year-over-year to $412.3 million, driven by contributions from recent acquisitions and increased demand in the semiconductor market. The company demonstrated strong operational execution, leading to a significant increase in net income to $61.0 million, or $0.45 per diluted share, compared to $32.7 million, or $0.24 per diluted share, in the prior year period. Despite the emerging uncertainty surrounding the COVID-19 pandemic, Entegris highlighted its proactive measures to ensure employee safety and operational continuity. The company's liquidity position remains robust, with $335.1 million in cash and cash equivalents and ample capacity under its revolving credit facility, positioning it to navigate potential economic headwinds. Management anticipates ongoing demand from leading-edge customers, though acknowledges potential near-term weakness in some mainstream segments due to broader economic impacts.

Financial Highlights

54 data points
Beta

Revenue

$412.33M

45.0% Gross Margin

Net Income

$61.01M

14.8% Net Margin

EPS (Diluted)

$0.45

Total Assets

$2.60B

Cash & Equivalents

$335.08M

Free Cash Flow

-$11.18M

Financial Statements
Beta
Revenue$412.33M
Cost of Revenue$226.85M
Gross Profit$185.48M
R&D Expenses$29.63M
SG&A Expenses$58.89M
Operating Income$80.74M
Interest Expense$10.56M
Net Income$61.01M
EPS (Basic)$0.45
EPS (Diluted)$0.45
Shares Outstanding (Basic)134.75M
Shares Outstanding (Diluted)136.37M

Key Highlights

  • 1Net sales increased 5% year-over-year to $412.3 million, driven by acquisitions and semiconductor market demand.
  • 2Net income more than doubled to $61.0 million ($0.45/share) from $32.7 million ($0.24/share) in Q1 2019.
  • 3Gross profit increased to $185.5 million, with a gross margin of 45.0%, slightly down from 45.4% year-over-year.
  • 4Selling, general, and administrative (SG&A) expenses decreased significantly by 28% due to lower deal and integration costs.
  • 5The company acquired Sinmat for $75.6 million (net of cash acquired) in January 2020, adding to its Specialty Chemicals and Engineered Materials segment.
  • 6Cash and cash equivalents stood at $335.1 million at the end of the quarter, while total debt increased to $1.08 billion.
  • 7Management is taking proactive measures to address the impacts of COVID-19 on operations, supply chain, and demand.

Frequently Asked Questions

Entegris' revenue growth in the first quarter of 2020 was primarily driven by sales from recently acquired businesses, such as Sinmat, and increased customer demand from the semiconductor market, compared to the same period in the previous year.

Profitability significantly improved, with net income more than doubling to $61.0 million from $32.7 million in the first quarter of 2019. This was largely due to higher net income, a substantial decrease in SG&A expenses, and improved operating income, partially offset by a slight decrease in gross margin.

Entegris acknowledged the uncertainty and potential impact of COVID-19 on global economies and the semiconductor industry, anticipating some near-term weakness. However, the company highlighted strong demand from leading-edge customers and its robust liquidity position, coupled with proactive measures to ensure operational continuity and employee safety, to navigate the evolving situation. They believe their current cash reserves and anticipated operating cash flows are sufficient for the next twelve months.

During the first quarter of 2020, Entegris completed the acquisition of Sinmat, a chemical mechanical polishing slurry manufacturer, for $75.6 million (net of cash acquired). This acquisition bolsters the Specialty Chemicals and Engineered Material segment.